USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the following information on put and call options for Citigroup

-Refer to Exhibit 16.4. A long strap is an appropriate strategy if
A) an investor wishes to generate additional income.
B) an investor wished to insure against a decline in share values.
C) an investor expected share prices to be volatile.
D) an investor expected share prices to remain in a trading range.
E) an investor expected share prices to be volatile but was inclined to be bullish.

Question

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the following information on put and call options for Citigroup
 
-Refer to Exhibit 16.4. A long strap is an appropriate strategy if
A) an investor wishes to generate additional income. 
B) an investor wished to insure against a decline in share values. 
C) an investor expected share prices to be volatile. 
D) an investor expected share prices to remain in a trading range. 
E) an investor expected share prices to be volatile but was inclined to be bullish.

Quizplus · Accepted Answer

A long strap is a strategy that involves buying more call options than put options, which is suitable for investors who expect volatility in share prices but have a bullish outlook.